On June 28th, Consun Pharma was invited to participate in the "GLH Mid-Term Strategy Conference 2024" and conducted a roadshow. Adhering to the corporate mission of "Inheriting the past and forging ahead, using good medicine to benefit the people", Consun Pharma has a high brand awareness and patient recognition in the pharmaceutical industry. They strive to "build a flagship in the field of nephrology and become a leading first-class pharmaceutical company in many specialties".

Stable growth in performance, high dividend payout to shareholders.

From the financial report data, since its listing in 2013, Consun Pharma's performance has always maintained a "steady growth" posture.

As of 2023, Consun Pharma's compound annual growth rate of revenue reached 16.3%, and net profit compound annual growth rate reached 17.8%, of which the ROE in the past three years has remained above 20%, far higher than the performance of the same period in the industry.

Against the background of stable growth in performance, Consun Pharma also continues to actively reward shareholders by giving high dividend payouts.

According to WIND data statistics, in the past decade (2013-2023), the average annual dividend payout ratio of Consun Pharma exceeded 30%. In 2023, the company's dividend payout ratio further increased to 42.1%, with a dividend yield exceeding 8%. In June of this year, to celebrate the tenth anniversary of the company's stock listing on the main board of the Hong Kong Stock Exchange, the company distributed a special dividend. This is the 19th time the company has distributed dividends since its listing, with a cumulative dividend payout of more than 2.2 billion Hong Kong dollars.

Figure 1: Company's dividend payout situation over the past decade.

Data source: Company's roadshow materials, GLH collation.

Build a "1+6" product line and enter the harvest period of the R&D pipeline.

The fundamental driving force for Consun Pharma to continue to achieve steady dividends lies in its stable and solid basic strength.

At present, Consun Pharma has established nephrology as its core area, and has taken the lead in promoting the comprehensive development of nephrology and imaging product lines, aiming to "build a multi-specialty leading, first-class comprehensive medical and pharmaceutical enterprise". At the same time, the company does not forget its diversified strategy, actively expands products in the areas of gynecology, pediatrics, orthopedics, dermatology, hepatobiliary, and digestion, and strives to build a multi-specialty leading, first-class comprehensive medical and pharmaceutical enterprise.

Figure 2: Company's "1+6" product cluster.

Data source: Company's roadshow materials, GLH collation.

As a leader in the Chinese kidney disease market, Consun Pharma has been deeply engaged in nephrology for over 26 years. In 2023, the sales revenue of the nephrology sector reached 1.74 billion yuan, a year-on-year increase of 11%.

Among them, the leading product Niuduxing granules achieved sales of about 1.65 billion yuan in 2023, a year-on-year increase of more than 10%. Niuduxing granules is not only the first Chinese patent medicine for kidney disease that has completed evidence-based medical research in China, but also the only "strongly recommended" Chinese patent medicine in the "Clinical Application Guidelines for Chinese Patent Medicine for the Treatment of Chronic Kidney Disease Stages 3-5 (Non-dialysis) (2020)". It maintains a double-digit sales growth trend every year. As a national medical insurance class A product and a national essential drugs catalog product, Niuduxing granules ranks first among oral modern Chinese medicine products for kidney disease treatment and is a long-term treatment medication for a large number of chronic kidney disease patients.

Another kidney drug, Yishen Huashi granules, has maintained a rapid growth momentum since it was included in the national medical insurance catalog, achieving sales of more than 80 million yuan in 2023, a year-on-year increase of more than 25%. Currently, the company is actively promoting the inclusion of Yishen Huashi granules in the national essential drugs catalog, and has begun to initiate evidence-based medical research. Anxin International pointed out that Yishen Huashi granules are expected to become another star product after Niuduxing granules.

In the field of gynecology and pediatrics, the sales revenue of Consun Pharma's gynecology and pediatrics drugs exceeded 290 million yuan in 2023, a year-on-year increase of about 22.7%. The market space of this sector is large, and the core product is Yuanlikang, which is the only iron supplement oral liquid that has entered the national essential drugs and medical insurance catalog. In the 2023 version of the medical insurance catalog, the reimbursement restriction for children's iron-deficiency anemia has been lifted. At the same time, the company actively promotes large-scale products, bringing expectations for new performance growth.

In terms of the R&D pipeline, Consun Pharma adopts the mode of "independent research and development + external cooperation + R&D innovation consortium". In nephrology, it actively lays out innovative Chinese medicine, small molecule innovative drugs, and generic drugs to achieve full coverage of CKD stages 1-5, and actively explores new models of integrated traditional Chinese and Western medicine in the treatment of kidney diseases. In the future, as these projects are gradually promoted and matured, the company will continue to realize the commercialization of products, providing strong driving force for performance growth.

Figure 3: Progress of the company's R&D pipeline.

Data source: Company's roadshow materials, GLH collation.

Summary

Consun Pharma has become a beautiful scenery in the Hong Kong stock pharmaceutical sector with high dividends and stable growth.

From the perspective of the capital markets, many brokerage institutions have already discovered the intrinsic value of Consun Pharma. According to WIND data, the consensus target price of institutions reaches HKD 8.67, with a 55.94% upward potential from the closing price on June 28th. Among them, Anxin International initiated coverage on the company and gave it a 'shareholding' rating, while Zhongyuan Securities believes that the company is an 'undervalued leader in the Chinese patent medicine sector with expected performance improvement' and gives it a 'buy' rating.